Shocker: Policy Dispute in Governor's Race

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If you've tuned out the governor's race, don't blame yourself. Each day is a series of exchanges about who has been lying about whose record. Which is why it was so stunning that yesterday, in the midst of the usual sniping, a substantive exchange leaked out.

The subject was capital gains taxes. Whitman has proposed eliminating the state tax on capital gains. The state is one of the few that doesn't tax capital gains at a lower rate than traditional income, and Whitman argues in her policy pamphlet that California should behave like other states when it comes to such taxes. Whitman argues that the change would boost capital formation and investment, and help produce jobs.

Brown, in the above appearance on CNN (which was mostly devoted to personal swipes), made one criticism on policy: "I'll tell you one thing we shouldn't do that Whitman's advocating is abolish the capital gains tax."

He predicted the Whitman proposal would cost the state between $5 and $9 billion annually. He also noted that she would benefit from such a cut.

Intriguingly, Brown's defense of the current capital gains tax in California is the sort of classical economic position associated with some conservatives. That position: the government should treat all forms of income, whether from salaries or capital gains, the same, as California does. In effect, Whitman, through the embrace of capital gains tax elimination and other targeted tax breaks, is seeking to have the government to pick winners and losers. (This smacks of the kind of "social engineering" conservatives like to complain about).

Of course, the capital gains rate isn't a front burner issue. But these are two candidates who, for all the attack politics, sound very much alike on the issues. Both say they want to cut spending. Both are against taxes. Each is competing to sound like a friend of immigrant families. So when they disagree on a matter of substance, let's be grateful.